I contributed $2,000 to a Roth IRA this year on my e-trade account. It appears as though I am going to earn over the $95K AGI limit making my contribution ineligible I believe. What are my options at this point?

I contributed $2,000 to a Roth IRA this year on my e-trade account. It appears as though I am going to earn over the $95K AGI limit making my contribution ineligible I believe. What are my options at this point?

I reply:

If your AGI is in the $95,000-$110,000 range (assuming that you're single), you can still make a partial contribution to a Roth. In that case, or in case you make more than $110,000, you may "recharacterize" all or part of the contribution to a "regular" IRA, which may or may not be deductible, depending on whether you're a participant in a qualified retirement plan. If you want to get the money out, you can, and if you act before April 17, 2000, I think you'll only pay taxes on the earnings. I may be wrong about that last comment, though. --Bob

Another thing you can look into is what you can do to lower your AGI for this year.

Pay your property taxes for next year now (in Dec)Make the Charitable contributions for the next six months or year now.

I reply:

Although these moves will lower taxable income (assuming the taxpayer itemizes deductions), they won't reduce the AGI by even a penny, and therefore won't affect Roth eligibility. The only ways I'm aware of to reduce the AGI (other than making less money :-( ) are to use a 401(k), a section 125 plan, and to realize a net capital loss of up to $3000. --Bob